CK Hutchison’s Panama Canal port contracts challenged, US$23Bn sale uncertain

The Panama Supreme Court’s announcement, published on its website, noted that after “extensive deliberation,” the laws underpinning a concession contract between the state and Hutchison Holdings’s subsidiary, Panama Ports Company (PPC), at the ports of Balboa and Cristobal were found “unconstitutional.”

PPC responded that “the decision is inconsistent with the relevant legal framework and the law that approved the contract.” The company added: “The new ruling lacks legal basis and jeopardises not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, as well as the rule of law and legal certainty in the country.”

International media cited Chinese Foreign Ministry spokesperson Guo Jiakun on 30 January, stating that China “will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.” 

Meanwhile, the Hong Kong government expressed disapproval of the ruling, adding that it “strongly opposes any foreign government using coercive, repressive, or other unreasonable means to seriously harm the legitimate business interests of Hong Kong enterprises.”

Future of US$22.8Bn deal in question

The ruling casts further uncertainty over the US$22.8Bn transaction, under which a consortium led by BlackRock’s Global Infrastructure Partners and MSC’s terminal-operating arm TIL would acquire Hutchison’s 90% stake in PPC, along with a global portfolio of more than 40 ports in 23 countries.

“The latest announcement from Panama provides further evidence that the deal will not complete in its originally announced form,” Drewry senior ports and terminals analyst Eleanor Hadland told Riviera.

Earlier press reports had suggested the deal in its original format was almost certainly dead, with Chinese authorities signalling they would not approve it, describing it as “an act of hegemony by the US". Instead, China promoted the potential involvement of COSCO Shipping in the transaction.

CK Hutchison had also indicated during the summer, after signs that the deal would not proceed as initially planned, that it was in discussions with the consortium to include a Chinese “major strategic investor” in the bid.

Trump’s pressure

The dispute forms part of the broader geopolitical tensions between the US and China. In his inaugural speech in his second term as President, Donald Trump made pointed remarks about China in relation to the Panama Canal, stating, "China is operating the Panama Canal, and we didn’t give it to China; we gave it to Panama, and we’re taking it back".

Following the announcement of the initial deal, President Trump had hailed the plans, which would have placed key assets under majority US ownership.

Founded by Hong Kong billionaire Li Ka-shing, CK Hutchison Holdings (CKH) is a multinational conglomerate with interests spanning retail, telecommunications, infrastructure, finance, and ports.

A Drewry analysis indicated that, despite accounting for just 9% of CKH’s total revenue in the 12 months ending H1 2024, its ports business – operated under Hutchison Ports – had been a steady and reliable cash generator.

MSC and port sector implications

The addition of a substantial portion of the portfolio would further reinforce MSC’s investment in the port and terminal sector. 

Ms Hadland noted that the world’s largest liner operator has continued to invest in the segment through both M&A and new concessions, and there is no evidence the company was relying solely on the Hutchison deal to meet future capacity needs. 

Nevertheless, “acquiring a significant proportion of the portfolio would be advantageous given the geographic spread of the assets,” she added.